• by July 12, 2004

WE WERE SENSING A CENSURE, JUST NOT THIS ONE -- We've been sitting around waiting to hear news of a media industry auditor censuring a member for violating its bylaws and casting new doubts on the veracity of the media business and sure enough that's what happened today. The only thing is, it wasn't the auditor (the Media Rating Council), the medium (television), or the member (News Corp.) we expected to hear the news from and about. But today's pronouncement by the Audit Bureau of Circulations admonishing three newspaper members - the Chicago Sun-Times, Newsday and Hoy -- for "circumvention of ABC's bylaws and rules" is an important step toward shoring up ad industry confidence over print media circulation estimates and the credibility of media industry audits.

In fact, the ABC board today took steps that go well beyond the transgressions of those three dailies to ensure that no rogue publisher can violate industry circulation guidelines, giving sharper teeth to the ABC's so-called "censure" provision, which will now be applied to any newspapers "that experience an adjustment of at least five percent and to those periodicals that experience two consecutive audit adjustments of at least five percent."

More importantly, the ABC board put some bite behind those teeth for the first time delineating penalties that would be imposed on publications it censures, including:

* They will be required to submit their circulation claims to more frequent audits: for the two years following censure, their records will be audited every six months, rather than annually.
* For one year following censure, their circulation claims will be excluded from FAS-FAX, ABC's semi-annual report of "top-line" publisher circulation claims. There will also be a notation in FAS-FAX explaining this exclusion is a result of the "censure."
* ABC will publicly disclose specific audit issues both within the ABC Audit Report, and in a separate notice to members.
* ABC will notify the governing body (e.g., the audit committee or the Board of Directors) of the "censured" publication of the "censure" action. ABC will also notify the governing body whenever ABC audit management believes the publication is not cooperating to complete the six-month audits in a timely manner.
* Censured publications will be required to submit to the ABC Board a plan of action for correcting their practices.
* ABC will levy a cash fine against a publisher found to have submitted a fraudulent circulation statement.

Lastly, the ABC board initiated a broad examination of ABC rules and record-keeping requirements to identify those that may need modification. For example, the ABC board voted to limit the newspaper "omitted day" rule to a maximum of ten annually and will examine the qualification of newspaper sponsorship sales through "barter" agreements, as well the definition of qualified purchasers for sponsored periodical subscriptions.

"The relationship between publisher and advertiser is based upon trust," stated ABC board Chairman Robert Troutbeck. "Each member of the ABC Board agrees that we, as an industry, do not tolerate rules circumvention, to say nothing of fraud, and will do whatever is necessary to preserve the trust between publishers and advertisers that all sides value so highly."